Commodities and Cryptos: Oil rallies, Gold drops, Bitcoin ETF Approval is coming

Oil

Crude prices are rallying after another round of strong earnings and economic data suggests the economy can still handle the current surge in energy prices. The oil market deficit will only get wider as global stockpiles remain at low levels, unexpected demand comes from colder weather, and on surging jet fuel demand as the US opens up international travel.

It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the northern hemisphere, and if the Biden administration taps the strategic petroleum reserves.

Gold

Gold was unable to hold onto the $1800 level after a better-than-expected retail sales report and strong round of earnings sent US Treasury yields higher, denting appeal to non-interest-bearing assets. Gold was ripe for profit-taking, but the downward move could extend if Wall Street continues to pump up equities. Gold needs to see some safe-haven flows and that might not happen as much of this week’s news painted an upbeat picture of the economy.

Gold bulls still need to be patient. Gold appears poised to consolidate here, but the start of a new bullish trend is around the corner once the global economic recovery gets on track and the dollar loses its dominance.

Bitcoin

Bitcoin prices are surging in anticipation of a potential SEC approval over the first US Bitcoin futures exchange-traded fund. Since 2013, the crypto industry has been trying to get an ETF done and now it seems like it will finally happen on Monday. An SEC Bitcoin ETF approval is a watershed moment for the crypto industry as this could be the key driver for getting the next wave of crypto investors.

A successful Bitcoin ETF launch next week could easily support Bitcoin’s run to record territory. Bitcoin mania has been brewing on social media platforms over the past couple weeks and while some traders may look to fade the SEC decision, it looks like many are adopting the long-term hold approach.

If ProShares and Invesco Ltd. have their respective Bitcoin ETF applications get approved next week and initial trading volumes are strong, Bitcoin could have enough momentum to target the $74,500 region. If the global energy crisis fears ease in the coming months, Bitcoin could have a path towards $85,000.

Despite all the excitement, Bitcoin still has regulatory hurdles and could see scrutiny over the amount of energy consumed as natural gas, coal, and crude prices skyrocket. Bitcoin is always vulnerable to a 20% plunge and traders should anticipate heightened volatile for the rest of the year.

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